The chief financial officer said that Circle's business model is to minimize risk, not “taking and managing risk.” He also explained how the firm protects its USD Coin reserves, emphasizing that Circle does not own these assets and that they are 100%t owned by USDC holders in segregated accounts labeled"for the benefit of USDC holders." Fox wrote:
"Circle is not allowed to use the USDC reserves for any other purpose. Unlike a bank or an exchange or an unregulated institution, we cannot lend them out, we cannot borrow against them, and we cannot use them to pay our bills." As a result, in extreme situations like bankruptcy, the USD Coin is purportedly still redeemable at face value. Also, the USDC reserves are completely disconnected from Circle's other activities, minimizing the risk of them being used to cover other losses.
Circle CEO Jeremy Allaire also recently provided documentation to demonstrate that the stablecoin has sufficient liquidity. He published a lengthy Twitter thread with papers to increase public confidence and transparency in the firm. The thread followed rumors that Circle had lost billions of dollars by offering wilder incentive programs to several banks, including Silvergate and Signature, to convert cash deposits into the USDC stablecoin.
Some firms have faced liquidity difficulties as a result of the bear market, making investors fearful that more will join them in the near future. Three Arrows Capital, once a prominent cryptocurrency investment firm,
USDC and transparency are two different concepts. Its trading volume is so low, but it keeps printing tokens...
Circle lies about reserves and prints more USDC in a bear market. That's not even close to transparency.
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